Investing In Residential Properties A Good Or Bad Investment?
Investing in residential properties is considered a very good investment by many
, but some people make the mistake of assuming it an infallible investment. What they (mistakenly) think is that home prices will continue to climb; as a result you can expect good returns whenever you invest in the residential properties. The myth (that residential property prices will keep climbing) is a flawed notion, which is proven wrong in many markets, most recent being the real estate bubble bursts in major cities like Dubai or New York. In both cities, prices fall like nine pins after some years of abnormal hikes. Does that mean residential property investment is a bad idea? Absolutely not, it just means that it is not a fail-safe investment and is as prone to capital losses as any other investment.
We cannot classify any investment as good or bad just like that. It is the time of investment and circumstances that make one investment good or bad. In case of residential properties, it is usually a very bad idea to sit (with the capital in hand) and watch the prices going up, buying eventually when the prices have touched their peak. The sooner one is able to identify a price hike, the better it is. You can tell that price hikes are around the corner when you see the demand of residential properties rising and surpassing the supply in near future (it happens usually in the developing cities when people move in from neighboring towns/countries to earn a better living).
One advantage of investing in residential properties is that you can get very good mortgage rates, which means all of your capital will not be stuck in one investment. You can start investing in residential property with a very small amount. No matter what the situation of market, the real outcome of your investment is decided by your purchasing price. Purchasing at right price is very important. You can manage to pay less by negotiating or keeping an eye on foreclosures or short sales. Once youve purchased the property, do not wait too long for housing prices to hit the highest point (because you never know what exactly is the peak). Sell out your home if you are getting a decent profit without hankering for maximum gains. Many investors are left regretting their decisions of waiting too long and refusing some very good offers in the process.
by: William
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